An important financial scandal has linked the Canadian cryptocurrency trade site ezBtc and its founder David Smillie to the theft of user funds worth about 9.5 million Canadian dollars. A group from the British Columbia Securities Commission (BCSC) found that ezBtc used these funds, which were supposed to be used to trade in cryptocurrencies, for personal things like gambling.
From 2016 until it shut down suddenly in September 2019, ezBtc collected more than 2,300 Bitcoin and more than 600 Ether from its users, saying it would maintain these assets safely in “cold storage.” But investigations showed that almost a third of these funds—935.46 Bitcoin and 159 Ether—were sent to online gaming sites like CloudBet and FortuneJack either straight from ezBtc accounts or through Smillie’s personal exchange accounts.
The BCSC panel said that this dishonesty caused big losses for investors because many customers couldn’t get their money out when ezBtc went dark. Despite how important the situation was, neither Smillie nor any ezBtc official went to the regulatory hearing in person, even though Smillie had a lawyer with him.
The issue has brought to light how slowly people in Canada are adopting cryptocurrencies like Bitcoin. Only 3% of the population uses these cryptocurrencies for everyday purchases. People in Canada still prefer old ways to pay, like cash, cards, and e-transfers. This shows that people in general don’t want to move to a cashless society.
Because of what happened with ezBtc, the BCSC plans to punish Smillie and ezBtc by September 24. These punishments could include fines and bans on trading in the future, with the goal of stopping similar things from happening again.
